Luxor Technology is preparing to launch a new hashrate-backed product that aims to deliver returns between 10% and 13%. The innovative approach, led by Matt Williams, Luxor's Head of Derivatives, involves investors providing Bitcoin as collateral. Luxor then lends this Bitcoin to miners, allowing them to maintain ownership of their mined Bitcoin while generating returns from hashrate trading and mining rewards.
This forthcoming product distinguishes itself from the failed ventures of BlockFi and Celsius. Unlike these bankruptcies, Luxor's product is grounded in real economic production, marking a novel method in Bitcoin investment. Investors' returns are produced from miners surrendering part of their profits to those who finance them, not through rehypothecation.
Part of Luxor's strategy involves creating a hashrate marketplace to provide better capital access for reputable miners. The hashrate is bought at a lower price and then sold at a higher one, generating returns for investors in the process. Luxor only holds bitcoin custody briefly while acting as an intermediary between investors and mining firms, reducing the counterparty risk associated with Luxor.
Despite this innovative approach, industry figures like Peter McCormack and Unchained CEO Joe Kelly have expressed concerns and advised caution due to the unstable nature of the bitcoin lending market. To address these concerns, Luxor is implementing measures to mitigate risks. These include conducting due diligence checks on investors and potentially requiring miners to have insurance.
However, despite the anticipation surrounding this new product, Luxor Technology has not yet disclosed a release date. The company remains committed to transparency and risk mitigation as it gears up for the launch.
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